Royalty Pharma Finance Trust, a company that acquires revenue-producing intellectual property in biopharmaceutical products, is seeking to lower the rate it pays on $2.72 billion of loans, according to a person with knowledge of the transaction.
The interest rate on a $1.88 billion term loan due in May 2018 will be reduced to 2.75 percentage points to 3 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will have a 75 basis-point floor. A basis point is 0.01 percentage point.
Royalty Pharma is also seeking to reduce the rate it pays on an $840.1 million term loan due November 2016 to 2.5 percentage points to 2.75 percentage points more than Libor, with a 75 basis-point minimum on the lending benchmark, the person said.
Lenders are being offered one-year soft-call protection of 101 cents, according to the person, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first year.
The company’s existing term loan due 2018 pays interest at 3 percentage points more than Libor, with a 1 percent floor and was sold to investors at 99.5 cents, according to data compiled by Bloomberg.
Royalty Pharma’s loan maturing in 2016 pays interest at a 2.75 percentage point margin, with a 1 percent Libor floor and was sold to investors at 99.75 cents, the data show.
The loans are quoted at 101.125 cents and 101.25 cents respectively, Bloomberg data show.
Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. are arranging the financing for the New York-based company, the person said. Commitments from existing lenders are due Sept. 27 by 5 p.m. while new lenders must let the banks know by noon on Oct. 2 whether they will participate in the deal.
Alexander von Perfall, vice president of investor relations at Royalty Pharma, didn’t immediately respond to an e-mail seeking comment.